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Zappos CEO Tony Hsieh and Las Vegas Mayor Oscar Goodman answer questions Wednesday, Dec. 1, 2010, at the Las Vegas City Council meeting, when it was officially announced the existing City Hall building would be used as the corporate headquarters for online retailer Zappos.com.

Tony Hsieh stands next to one of the empty storefronts on East Fremont Street. While the area is beginning to see signs of a business life, dozens of Hsieh's employees at Zappos.com are working on visions to bring music, education, restaurants and other cultural amenities to the area, hopefully by the time the company moves its headquarters and 1,200 workers into City Hall in 2013.

Opening “The Colbert Report” on Monday night, host Stephen Colbert said of his guest, “If we don’t like him, we can return him free of charge!”

The guest was Zappos CEO Tony Hsieh, whose Las Vegas-based company is famous for its acute attention to customer service. Known for its inventive online retail business model and relentlessly happy approach to its company operations, Zappos plans to move from Henderson to City Hall in downtown Las Vegas next year.

“What it means is we offer shipping both ways. A lot of customers will order 10 different pairs of shoes and try them on in the comfort of their own homes and send back the shoes they don’t like or want,” Hsieh explained. “It’s kind of like Netflix, but with shoes or clothes.”

Hsieh then explained the company’s remarkably flexible return policy.

“We have a 365-day return policy for people who have a tough time committing or have trouble making up their minds (laughter),” he said. “For most or our loyal repeat customers, we promise they will get their order in a week, but for most of them we do a surprise upgrade to overnight shipping, so a lot of people order as late as midnight Eastern time, and the shoes show up on their doorstep eight hours later.

“That creates that whole 'wow!’ effect.”

Applause.

“Wow,” Colbert said.

“Exactly,” Hsieh said.

“A lot of people need jobs right now,” Colbert continued. “What are you looking for in a Zappos employee? You say that you value weirdness.”

“Yes,” Hsieh answered.

“So are you looking for a guy who comes in with, like, a pet snake around his shoulders, and he starts rapping in Esperanto?” Colbert said, to more laughter. “What do you mean by weirdness?”

“Well, we do two sets of interviews for everyone we hire,” Hsieh said, attempting to stay on point. “The first is standard stuff where we’re looking for skills and experience and so on. The second set is looking for a culture fit, and for each of those 10 core values, one of which is to create fun and a little weirdness, and we actually have interview questions for that. The key for weirdness is ‘a little weird,’ not snake-psycho weird.”

“You say you value a little weirdness, and people are allowed to have costume parades?” Colbert asked, arching his eyebrows.

“Yes,” Hsieh said, grinning.

“Some people get to come and spend the night at your house?” Colbert pressed on.

“Occasionally, yes,” Hsieh said.

“Is this a cult?” Colbert asked, as the audience laughed. “Are you Dear Leader Father? Do you have child brides? How much control do you have over these people?”

“Well, that’s where we came up with our list of 10 Core Values,” Hsieh answered. “You can see what they are. It’s not actually myself out there hiring people. It’s actually everyone in the company who knows what those core values are, and they make business decisions based on those core values in terms of what’s right for the company and for our customers.”

To which Colbert said: “The New York Times said, ‘At times, Mr. Hsieh comes across as an alien who has studied human beings in order to live among them.”

More laughter.

“Yes,” Hsieh said, smiling. “It is partially true.”

“Are we making news right now?” Colbert said.

“Yes, tonight on this show …” Hsieh said, to more laughter. “Actually, there is a section in the book that talks about the science of happiness, and that’s a really interesting part of psychology that I’ve been reading up on over the past few years, and there’s a lot of interesting parts that you can apply not only to your own personal life, but to business, as well, in terms of making your customers happier and employees happy.”

Hsieh then specified the sort of happiness he tries to establish at Zappos.

“For example, people have found that having perceived progress is an important element in their happiness,” he said. “Or, having perceived control, being part of something bigger than yourself, that has meaning to you. Or, having a connection, both in terms of the number and depth of your relationships, those are all things that we try to incorporate into our culture at Zappos.”

“I’m actually glad you asked that, because that is a common response we get, especially from the business world, where the mentality is, ‘We should just focus on profits,’ and happiness has no place in the workplace,” Hsieh said. “But research has actually shown that if employees are happier and customers are happier, and there are strong company cultures, that drives business results, and those businesses tend to outperform their peers in the long run. … For example, everyone knows about the link between employee engagement and employee productivity. One of the best predictors of employee engagement in the research is whether you have a best friend at work, or a number of friends at work, and all of that leads back to happiness in the workplace.”

Colbert wrapped with, “Mr. Hsieh, are you happy with how this interview has gone?”